On 8 September 2020, the Protocol (the “
Protocol”) amending the Cyprus and Russia Double Tax Treaty (as amended) (the “
DTT”) was signed between the two states. The amendments to the DTT shall apply from 1 January 2021.
The amendments introduced by the Protocol are set out below:
1.Withholding tax on dividend payments
The withholding tax rate on dividends payments has been increased to 15%. However, a reduced withholding tax rate of 5% applies where the beneficial owner is:
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an insurance undertaking or pension fund;
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a company the shares of which are listed on a registered stock exchange, provided that no less than 15% of the voting shares of that company are in free float and which holds directly at least 15% of capital in the company which is paying the dividends throughout a 365-day period that includes the day of payment of the dividends;
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the Government or a political subdivision or a local authority; or
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the Central Bank.
2. Withholding tax on interest payments
The withholding tax rate on interest payments has been increased to 15%. However, the following exceptions apply:
-
A withholding tax rate of 0% applies to the following categories:
(i) where the beneficial owner is an insurance undertaking or pension fund;
(ii) where the beneficial owner is the Government or a political subdivision or a local authority;
(iii) where the beneficial owner is the Central Bank;
(iv) where the beneficial owner is a bank; or
(v) on interest paid in respect of government bonds, corporate bonds, Eurobonds listed on a registered stock exchange.
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A reduced withholding tax rate of 5% applies if the beneficial owner is a company the shares of which are listed on a registered stock exchange, provided that no less than 15% of the voting shares of that company are in free float and which holds directly at least 15% of capital in the company which is paying the interest throughout a 365-day period that includes the day of payment of the interest.
The text of the Protocol can be found
here.